Thursday, April 13, 2017

A 2011 presentation explained how FSS would streamline the handling of flat mail. Oops!

What many have long suspected has now been confirmed: The U.S. Postal Service’s Flats Sequencing System is a disastrous failure that cannot be fixed.

The FSS is adding so much to the costs of handling magazines, catalogs, and other flat mail that no amount of machinery tweaks, Lean Six Sigma projects, or "Tiger Teams" can ever make it right.

“When all processing and delivery costs are included, an average Periodicals flat addressed to an FSS zone costs over 10.5 cents more than if addressed to a non-FSS zone,” postal expert Halstein Stralberg wrote recently.
Assuming the same 40% cost differential applies as well to flat-shaped Standard Mail, such as catalogs and retailer flyers, Stralberg’s analysis indicates that FSS is adding several hundred million dollars annually to the Postal Service’s costs.

And that doesn’t even count the $1.3 billion spent on purchasing the huge machines or the additional investments in building modifications, training, and other start-up costs.

“Because of the large investment in the FSS and the great hopes that were attached to them, USPS managers appear still unwilling to admit that the program is a failure,” wrote Stralberg, a longtime consultant on postal costing and prices to Time Inc.

Another utopian vision from 2011

Based partly on Stralberg’s analysis, three mailer organizations recently called for the USPS to “(1) retire the FSS machines, (2) allow mailers of flat-shaped mail to prepare their mail for (and qualify for) Carrier Route and other discounts in all zones; and (3) make Carrier Route and other worksharing discounts for flats deep enough to cover 100 percent of the costs avoided by the worksharing.”

The three organizations are MPA-The Association of Magazine Media, the Association for Postal Commerce (aka PostCom), and the Alliance of Nonprofit Mailers.They submitted their comments and Stralberg’s analysis to the PRC to counter the USPS’s proposal to abolish the inflation-based cap on Periodicals postage rates, as explained in my recent Publishing Executive article, Postal Rate Fight Continues as Publishers Battle USPS "Stupidity Tax".

A 2003 Stralberg presentation correctly predictedFSS mail would cost more than carrier-route flats.

Stralberg’s predictions in 2003 about why FSS would not reduce flats-processing costs have turned out to have nearly prophetic accuracy, except the program turned out even worse than he expected.

For example, he contradicted postal officials who claimed that their costs for FSS-sorted pieces would be lower than for pieces in carrier-route bundles. (Postal officials now acknowledge that carrier-route mail is cheaper to deliver than FSS mail.)

But Stralberg never predicted that the FSS cost per Periodicals piece would be nearly double that of carrier-route pieces, as his recent analysis shows.

Here’s the MPA/PostCom/ANM summary of why the Postal Service’s assumptions about FSS turned out to be so fatally flawed:

1) “The Postal Service’s planners greatly underestimated the extent to which mailers would sort flats to the carrier route level.” About half of flat-mail copies were in efficient carrier-route bundles when FSS was first conceived more than a decade ago. Because of co-mailing and similar mail-consolidation efforts by printers, the proportion is now higher than 70% in non-FSS zones. (When a system nearly doubles the cost of handling 70% of the mail, it cannot possibly save enough on the other 30% to reach breakeven.)

The view from 2010, before reality intruded.

2) “The Postal Service overstated the costs of manual sequencing of carrier route flats by carriers, and thereby overestimated the costs saved by diverting the sequencing work to the FSS.” Stralberg called out this flawed assumption in a 2003 presentation to mailers and postal officials.

3) “The Postal Service, erroneously assuming that practically all flats within an FSS zone would be placed in delivery sequence by the FSS, removed the vertical flats cases carriers had used for manual sequencing.” This triumph of optimism over reality adds to the amount of time carriers need to prepare flat mail for delivery. Barely half of the flats in FSS ZIP codes are presented to carriers in delivery sequence.

4) “The Postal Service’s planners incorrectly assumed that nearly all flats would be machinable on the FSS.” Stralberg warned in 2003 that flat mail unsuited for the Postal Service’s existing machines probably couldn’t be handled on the FSS, meaning that “non-machinable flats will cost more” under FSS.

5) “The Postal Service’s predictions that practical concerns about the FSS machines themselves, including their footprint, cost, and complexity, would be solved during the design and implementation of the system proved incorrect.” That’s nearly a direct quote from Michael Plunkett, a USPS pricing manager when FSS was being developed and now PostCom’s President and CEO. He also told the PRC, “From the outset of the FSS project there was significant skepticism that the proposed technology would achieve the intended results and concern that substantial capital was being invested in a system that would unnecessarily complicate a network that already needed to be rationalized.”

6) “Finally, because flats mail volume was lower than the Postal Service had expected, it added many outlying zones to the territory covered by each FSS machine, causing substantial service degradation.” Mailers warned postal officials more than a decade ago that digital disruption was reducing the volume of printed catalogs and magazines, but the Postal Service persisted with an FSS plan that assumed gradually increasing volumes. Flat mail peaked in 2005 and has dropped about 40% since then.

22 comments:

Anonymous
said...

When the machines were planned years ago, the postal service thought the volume would increase every year. They gave the cost sharing deal because they thought they could not handle the additional volume even with the machines. Supposedly it's not working financially because the flat volume has collapsed. Maybe the Postal Service should eliminate the cost sharing discounts and force more flats into the machines?

Postal management will never go for the idea of retiring FSS because they know that they would have to go back to all the FSS offices and put the routes back in that they took out when FSS was implemented. More office time and shorter routes isn't what the Postal Service wants. They want as few people delivering as much mail as possible, to the extent that they try to make carriers work for free with the concept of "pivoting" which is delivering your route plus some overtime but doing it all in 8 hours. They use their phony DOIS, PET or COR numbers to try and bully, cajole and intimidate carriers into doing things like skipping their breaks or running off their routes.

Not only did they not foresee the drop in flat volume, they never imagined the increase in parcel volume. Carriers are working harder than ever before and are more efficient than ever, and all supervisors do is crack the whip harder instead of adjusting routes.

" practically all flats within an FSS zone would be placed in delivery sequence by the FSS, "..............THIS is a joke. I remember when we first got FSS. The instructions were : You will report to your route where there will he a "handfull" of mail to manually case"............ They estimated about 15 minutes for each carrier to case their mail. HA HA!!! Some days I have MORE cased mail than I do FSS.

The new legislation, if passed, would pay the people at the top of Postal hierarchy like 'real-world' executives. There should be a clause that would include 'real-world' unemployment for failures like this.

They need to do away with those cheaper rates for "marketing mail". At least 10% of it is undeliverable because they use old mailing lists and 98% of what is left ends up in the trash 30 seconds after the people take it out of their boxes. They need to cut the discount down to like 10% so these companies stop sending out so much trash. It is just waste of time and paper.

As a city carrier I don't see the advantage of FSS over having us casing pre-sorted flats. I have spoken to my postmaster and supervisors about it and they agree that at least from a delivery point of view, it's not cost effective. I work at an office with 12 city and 3 rural routes. At least twice a week, we have to carry 3 bundles: Red Plums, and another local paper which are both delivered to all addresses. Carrying 3 bundles causes overtime for nearly everyone in my office because it is inefficient. With FSS, we now have 3 bundles every day and 4 bundles on 2 days. By contract, we can't carry 4 bundles, (which is physically impossible), so, what gets cased? The FSS. Kind of defeats the purpose of it 2 days a week. The PO also changed our cases so that each cell in our case contains at least 2 addresses. I have some customers who required 3 cells. The person next to me was told to use the one cell for the 28 unit complex on his route! Now he just throws it all in a tub and sorts it when he gets to the complex. On the days when we have 4 bundles, we cant fit the mail in the cell, so it gets delayed. I could go on, but you get the idea.

Even worse than the machines being broken down are the days that the PO purposefully holds the mail and does a single run for two (or more) days worth of mail!! My route us small old style apartment boxes 18"H × 3"W × 3"×D when I get two (or three) days of mail it literally won't fit!!!

Postal management is the worst they change our start time to 8 00 but we all start working about 6 am and write in 8 to make management happy it's crazy.so on our paystub our actual ours worked are always less than evaluated hours. Everything is falsified our work ours and time up scans.

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